Q2 2023 VTEX Earnings Call
Hello, everyone and welcome to the vertex earnings conference call for the quarter ended June 13 2023.
I am Julia Fernandez Investor Relations director for our.
I wish you and yours, except it's presenting today are jealous that much when you're from vertical seal and take a look at my desk, Chief Financial Officer, and you shouldn't eat but do you know what music pretty young founder and co CEO Alan They probably go to just started she officer will be available during today's Q&A session.
I would like to remind you that management may make forward looking statements relating to such matters as continued growth prospects for the company industry trends and product and technology initiatives. These statements are based on current Liberty living information and our gorilla affirms its expectations and projections about future events, while we believe that our worse I'm just expectation for <unk>.
Richard on bolt if you up the good work.
You are cautioned not to place undue reliance on these forward looking statements certain of at least got uncertainties are described in the risk factors and forward looking statement sections of Paychex form 20-F for the year ended December 31st Judge Judy to another beat its filings within the U S Securities and Exchange Commission, which are available on our Investor Relations website.
Finally, I would like to remind you that during the course of this conference call. We may discuss non-GAAP measures a reconciliation of those measures to the nearest comparable GAAP measures can be found you know recycled water tender three earnings press release, but you know what when I want investor relation website now let me turn the call over to jail that Aldo the floor is yours.
Yeah.
Thank you Julia.
Welcome everyone and thanks for joining our second quarter 'twenty 'twenty earnings Conference call.
In the past few months, we have witnessed.
The second milestone thats exciting events that had proper dose cohort.
That's one calibration a day.
Our commercial was there that gathered over 20000 per day, and we are we announced the launch of five new products with excellent customer reception to our first time out for Investor day on the secondary cities.
Deal.
For those who didn't have the chance to connect to our Investor day I highly recommend you take a look at the audio recording are available on our Investor Relations website.
As we embark on this earnings call to provide an update on our performance during the second quarter.
I'm pleased to announce that the company has demonstrated remarkable resilience.
The strong performance in the second quarter, our Gen V experience.
Twin 0.4% year over year growth.
Hello.
Asking rent Oxitec strong value proposition that's continues to attract new customers shopped lots of work.
Despite the challenging macroeconomic scenario do you see customers continue to outperform the market with same store sales remaining teens range, although slightly below historical levels.
Additionally, not only have we exceed the dollar revenue projections, reaching almost $48 million this quarter, but we have also successfully maintain leverage across all of our cost and expenses Kansas.
<unk>, maybe environment, our team's unwavering dedication and strategy decision, making.
That allowed us to drive an exceptional results.
Thanks Julien.
Every quarter, we feel closer to our goal of becoming the backbone of connected commerce.
Not a firm date Power's unified commerce experiences.
Around the globe.
Now, let's delve into statistics.
In second quarter, we added several new customers that migrated from audio block reforms, including spring good carrier.
Brazil, if you add up biking probe geely in Romania, Superman Cognos internationally HEB in Mexico.
Linda why downloads you live.
And Keyser Ross in the U S.
In addition to attracting new customers. We also focused on strengthening our relationship with existing customers by supporting the expansion efforts.
During the second quarter, several premier brands and retailers chose to expand their operations would that by opening new stores.
Integrating with us thinking through build core who had the distorting Panama.
Currently operating in Latin America in countries, such as Mexico, Colombia, and Chile, among others, So I'll need your finger.
Well the store in Costa Rica.
And to be operating in Latin America in countries, such as Mexico, Colombia, among others and Whirlpool, who added stores in Mexico, Spain, Sweden, No operating Latin America en masse.
APAC in countries, such as Brazil, Italy.
Singapore and more.
The decision on these brands to expand their operations would that serves as a testament to the strength of the plot the spark and its compelling value proposition.
Which has forced the trust and loyalty among our customers we've take immense pride in being the partner of choice for these.
<unk> gross beds.
True to offer.
We can bring support leveraging D athletes up excuse me good stores and maximize their potential.
Setting the right features and project is at the forefront of our strategy.
Following our customers to accelerate their growth and enhance operational efficiency.
Commitment life, and helping Jim sure back the overall market expectations and we have dedicated a.
Companion, Dan on the profitable growth.
Every step of the way, we're proud to share that Texas was a war that Mad dog in all 24 categories of the 'twenty to 'twenty three pilot value would be to be combined.
Enterprise and mid market.
We've received gold matching the customer service and support integration operations infrastructure market, placing promotions management.
Our standing point is that we would the skull vendor to achieve a gold medal for the marketplace product capability.
<unk> reports so to define our position as the top choice for enterprise it you'll be couplings.
On top of all of the Investor Day customer cases, let me share some incremental success stories that demonstrate the capability of our platform and the remarkable outcomes they have achieved.
Geisha do we not only beauty brand with a presence in 13 countries and over 68 store partner with Jacksonville.
Tax in Romania to Brookdale with Salt life sales growth.
By leveraging our marketplace solution migration diversified sales channels and expanded its reach by offering complimentary breeding projects. Furthermore, we work closely with them to customize the front end of its website.
<unk> in a staggering seven schools increase in online sales.
This collaboration accelerate its e-commerce success, despite its great position in the competitive beauty industry.
Mid day, upper Indian and Chinese electrical appliance manufacturer with a vast global footprint comprising 200 students and over 60 overseas branches Jordan to reject for scalable solutions and improved business performance in Brazil.
Midday is successfully implemented critical features such as the catalog management pricing optimization.
Promotional tools drop out of the box solutions.
Those were impressive with me today are teasing a remarkable 10% increase in the overall conversion rate of 40% boosting organic revenue a need per se, it's rising mobile conversion rate and a 13% reduction in pulse rate after their migration to <unk>.
Despite these ships as they prove side I'll get back in power business, two O Lok its split pension and in target markets.
And having a leading premium chocolate brand under the <unk> group in Brazil.
The borrowers get tax Omnichannel architecture, Julien per se, it's doing the eastern stupid.
Leveraging our partner for the CRM group achieved a remarkable 20% increasing sales by seamlessly integrating its physical stores and franchise E. H E E Commerce operations.
These integration a lull for expedite delivery option and boosting customer satisfaction. Additionally, Copenhagen experienced a 15% surge in store pickups.
55% growth in sales pro loyal customers and the influx of 2 million customers content via Whatsapp.
<unk> comprehensive solutions proven instrumental in driving coping hagen growth and delivering an exceptional customer experience.
A global sportswear giant and a key player in the local market selected rejecting Latin America joint.
Customer experience and safeguard our guests to reach standards attack utilizing text customizable shook out process. The integrated don't give drought protocols to tourists will be our fifth order across the web and user interface China's three.
And post order creation.
This proactive approach a bar with our customers to manage potential attacks war effectively enhancing security team customer satisfaction.
Through these collaborations vertex enabled them to protect the limited edition that you use and provide the consumers and exceptional online shopping experience.
Okay.
We then ball for motors, a BMW dealer.
Partnering with vertex to successfully transition with ultimate seems congress to cater to customers needs through digital channels.
By implementing Plaza four P M dot lumi, MBM and Diablo motorized they.
They provided the cases online shopping experience over call me automation challenges B M. W. Utilize it detects user friendly and comprehensive tools, allowing <unk>.
To participate leukemia head BMW plants to enhance its stock before and offer customers, an even more convenient experience breathing the option of vertical reservation closer to this transformation in the automotive industry enable customers to purchase.
Cars from the comfort of their homes, thanks to advancement in Digitization and seamless communication with sales representatives.
What do you need 365, a luxury market space, representing over 200 National and international brands from Brazil, We wanted.
The new network of luxury malls leverage detect statutory to optimize its website performance by implementing our solution neglecting need 365 achieved.
This results in corporate performance metrics, including making the page much more stable with a remarkable 92% reduction in shifting constant ensuring a smooth and interactions with 81% decrease in input delays and making the overall loss.
Experienced staff with a 27% improvement in display the main culprit.
This distinction improvements and use.
Use it experienced in solid despite requested 365 positions as the premier destination for luxury shopping in Brazil.
Meta tools, a leading company in the do it yourself industry partnering with detecting Germany, Italy, and Romania to launch a key blincoe sharp Dr. Rowe marketplace with an estimated 50 major merchants and brands with a minimum 100000.
And S. K you listed expected in the first year met the tools should promote Romanian company, then drives people's growth. The marketplace, we will offer a wide range of projects, including power tools gardening equipment cleaning supplies and more by.
By partnering with Vjax method, two says Gee I use it a friend to the plaza for them that allows for easy expansion and international scalability.
<unk> E. Bruce Shaw, Dr. Rowe marketplace aims to case to doing it yourself enthusiastic and professionals connecting them with quality product and fostering a sense of community.
In addition to the remarkable customer success cases, I'm delighted to share with you that during our Investor day, we had the privilege of hosting a panel with his sharp fall pre support transformation important to follow operations at Carlyle group, the controlling shareholder of beauty.
Our recently announced a new customer in the U S. We also had the pleasure to announce customer infer and close in the U S. As a new customer is doing at our Investor day.
These teams Brad had shortly EBITDAX for the trust digital Commerce Butler for them. They are expected to go live progressively in the coming quarters.
Decision to partner with vertex holds significant importance and a day's worth delving into the reasons behind the Chubb.
By selecting <unk> this fourth thinking companies recognize a blocker.
There are no value and will boost capabilities, including its scalability flexibility and the ability to seamlessly support and expansion into new markets. We are excited to a company beauty culture.
And closed on their journey and we are confident that our partnership will yield exceptional results.
Our global expansion journey has been progressing and the additions to our growing list of <unk> customers a solid step in our journey.
We take great pride in our effort to provide cutting edge solutions that the ball works businesses to embrace digital transformation, which industry leaders have also recognized.
We believe that as we continue to onboard new customers such as beauty culture custody annoying horse, we will pave the way across the globe to achieve our mission to become the backbone of our connected commerce I would like to express my gratitude to our 13 Herb did then five detect them.
<unk>, who are dedicated to making I'd be glad that future, a reality and to our customers partners and investors.
I'll now hand, the call over to Ricardo to discuss our financial performance for the quarter.
Thank you Zelda.
Hi, everyone I am pleased to share <unk> Q2, 2023 financial results with you.
I'm excited to share that once again, our company's top line performance was robust.
As highlighted by yet, although our Q2 G. M D growth achieved 23, 4% in U S dollars and 21, 2% on an FX neutral basis.
Our Q2 revenue exceeded expectations, surpassing the upper end of our guidance, reaching $47 $9 million and reflecting a year over year increase of 23, 7% in U S dollars and 22, 9% on an FX neutral basis.
This outcome demonstrates our ability to attract new customers to <unk> platform and the resiliency of our blue chip customer base.
We are reassured to observe that we are continue to assist our customers in outperforming the market.
Double clicking on our topline.
Our subscription revenue reached $44 $8 million in the second quarter of 2023 from $36 $6 million in the same quarter last year.
Year over year increase of 22, 2% U S dollars and 21, 4% on an FX neutral basis.
Our services revenue reached <unk> three $1 billion in the second quarter of 2023 from $2 $1 million in the same quarter last year.
Significant year over year increase given the new projects that we are under implementation.
Yeah.
Our subscription gross margin also improved versus previous quarters, our non-GAAP subscription gross profit was $33 $7 million compared to $26 $6 million in the second quarter of 2022.
non-GAAP subscription gross margin was 75, 3% in the second quarter of 2023 compared to 73, 9% last quarter and 72, 5% in the same quarter of 2022.
The 280 bps year over year margin expansion shows the commitment of our team to keep improving our margins.
This margin improvement was driven mainly by migrating noncore services through more efficient hosting providers and the optimization and operational leverage of our support costs.
We are proud of what we have achieved on this front and excited about what's to come.
We delivered a year over year improvement of more than 120 bps on our overall gross margin in Q2.
We continue working on a few implementations in the U S and Europe , such as the ones mentioned Brierley beauty counter casino in Hurst, where we are proactively investing in our services offering to ensure successful go lives.
By design this impacted our services gross margin and therefore, our overall gross margin.
Even though this quarter, we deliver an improvement in services gross margin versus last quarter. We anticipate this commercial decision to still have some impact on our gross margin in the short term.
It will position us better in newer regions in the medium to long term, enabling us to implement new customers smoothly and successfully.
Our non-GAAP total operating expenses reached $34 $1 million in the second quarter of 2023 from $31 $9 million in the prior quarter and $43 $3 million in the same period last year.
The year over year improvement reflects the organizational restructuring we made over the past year.
The quarter over quarter increase in expenses is mainly attributed to the foreign exchange appreciation of the Brazilian anyhow as most of our payroll in R&D and G&A is based in Brazil.
What are the drivers that also impact our expenses to a smaller extent, where the annual salary increase in the R&D team and a minor impact from vertex day event was efficiency improved significantly compared to previous year.
Thanks to our diligent expense management and strong revenue growth our non-GAAP operating income showed significant improvement.
In the second quarter of 2023, we achieved a negative three 2% margin a remarkable improvement from the negative 45, 1% margin recorded in the same quarter last year.
This represents an impressive year over year improvement of 42 percentage points.
Furthermore, on a quarter over quarter basis, we saw a six five percentage points improvement in our non-GAAP operating income margin.
These positive trends highlights our commitment to enhancing profitability and strengthening financial performance, while still delivering high revenue growth.
As of the three months ended June 32023, <unk> had a negative $3.3 million free cash flow compared to a negative $5.0 million in the prior quarter and a negative $12 $7 million free cash flow in the same quarter of the prior year.
So the most ready operational efficiency from a cash flow perspective.
Before I move to the outlook for Q3 and fiscal year 2023, I would like to update you on the share repurchase program approved in August last year.
As of June 32023, the remaining balance under this authorization was nearly $3 $5 million, we purchased $6 7 million shares at an average price of $3 $93 per share.
Today, we are pleased to inform our investors that <unk> board of directors has approved another one year share repurchase program for <unk> class, a common shares up to $20 million.
This decision on the timing and quantity of share repurchase if any will be at the discretion of our management taking into consideration market conditions and other relevant factors.
This move reflects our confidence in the company's financial position and our commitment to delivering long term value to our shareholders.
Looking ahead, we are excited by vertex adaptability and ability to drive.
Despite the uncertain macro vertex has consistently outperformed the market while also delivering robust long term performance metrics.
We are currently targeting revenue in the $48 $2 million to 49 zero million dollars range for the third quarter of 2023 in.
Implying a year over year growth of 19% on FX neutral basis in the middle of the range.
For the full year 2023, considering the current performance of the company, we are increasing the bottom and the top of the range now targeting the full year, two and between 18% to 20% on an FX neutral year over year basis, implying a range of $191 million to 100.
And $95 million based on Q2 average FX rates.
As we continue executing our strategy for profitable growth, we anticipate relevant year over year improvements in non-GAAP operating income margin in the second half of 2023.
We are confident in <unk> unique value proposition.
Centered around enabling our customers to achieve profitability and sustainable growth by reducing total cost of ownership and simplify their commerce architecture.
We will continue to execute the integration of e-commerce with physical stores, delivering omni channel excellence that enables us deliver rapid growth and profitability that our customers seek.
We remain focused on adapting to market conditions, providing innovative solutions and capitalize on emerging opportunities to drive sustainable success for our valuable customers partners employees and investors. We are excited about the opportunities ahead.
With that let's open it up for questions now thank you.
Thank you to ask a question press Star then the number one on your telephone keypad. Once again. Please press star one to ask a question and we will pause for just a moment to compile the Q&A roster.
Thank you and our first question comes from the line of Marcelo Santos from Jpmorgan. Please go ahead.
Good evening, thanks for the opportunity for some questions I have two.
Two questions. The first is the btn rankings medicines management expectations.
<unk> models.
More or less what source could you please discuss <unk> like more stores with more volume.
Sales cycle with short or just wanted more color on them.
What came better than you expected and the second question.
Regarding the further decline in head count.
Just discuss like what changes are you, making malware. This changes completed thank you very much.
Yeah.
Yeah.
Mr. <unk> was slightly below expectations are existing enterprise customer base G. M V steel grow into things levels <unk>.
Significantly above the market and it was a remarkable driving force behind <unk> future growth.
Why are we acknowledge that we are still navigating and uncertain macro scenario that may impact the things for sale existing customers and <unk> and to save cycle of new customers. Our positioning remained shrunk our commitment to providing composable incomplete platform <unk> and a relentless focus on.
Delivering value to our customers continue to set us apart.
We have a pipeline off or missing cases undergoing implementation and we are seeing encouraging sublimation office sales cycle further bolstering our confidence you maintaining our our growth trajectory.
Looking ahead, we remain grounded in our guidance and confident in our growth prospects are strategies aligned with our execution and we are confident in achieving our hotline targets and for the second question I'll pass it over to <unk> to talk about the the head count.
So about the head counts.
<unk> has remained stable when compared to the previous quarter. We are confident that our current staffing levels of line well with the demand we are experienced and we don't foresee any substantial changes in these regard.
Oh, a head count will likely you're <unk> around these levels, possibly with a slightly uptick, but we maintain a rigorous hiring standers, which can occasionally result in a longer term turnaround time for replacements do a natural that's right <unk>. So in some cases, we might choose to refrain from revealing.
Position incense submitted nisley, new roles will be introducing based on our operation requirements.
<unk> might lead to minor fluctuations in headcount from order to water, but we are not anticipating any significant shifts considering that personnel.
In the first party of 2023, we have around 1300 second quieter around 1300, and we've foreseen that level. So we are not anticipating any any changes on that and considering the personal cost make up a substantial portion of our expenses.
<unk>, even have counting comes up in conjunction with our projected revenue growth.
It is the driving force behind our expectations off continue year over year operating income margin improvement for the second half off of <unk>.
Perfect. Thank you very much for the comprehensive answers.
Thank you. Our next question comes from Lucas Chavez from UBS. Please go ahead.
Hi, Thanks for having my questions here from my side here. The first one is you mentioned during your best Sergei and today I'll, some new projects and solutions for kissing engagement. So can you. Please come and don't do reception by the clients of the new product launches and how do you see it's Kelly forward.
The second one <unk> and are you sink in pet stores more aggressive on pricing or <unk> or janiero prices. Thank you very much.
Please to get these Mariano first of all on the competition. We don't we don't see a a brutal change on the on the on the <unk>.
Dynamics, we are seeing the market operating in in the same kind of.
Price, we also but although we see <unk> I changed from a client perspective.
The client is much more aware of the total cost of ownership.
Off the platforms in the market. So, although we don't see it <unk> kind of changing price strategy, but we are seen a pricing moment to kind of a big topics on the <unk> on the process that it would be higher so on <unk> as we are positioning as a low.
<unk> a sustainable platform, we <unk>, our best that we can capture the movement of the market on these on the second question around the broad again solutions for the engagement.
We see the channels you organic channels.
One of them.
<unk> a high profitable operations for our customers so to to sell more with their organic assets. It is one of our strategy to make our clients grow. So I can call I can code for example to extend the endless Iowa in physical stores and joining operations with the platform. So yes <unk>.
Next day, the Vitek speaking back that combines we've <unk> gives the ability of any kind of <unk> to have a seamless became back solution that can put all the physical stores into the digital journey. Another one is the life shopping it's a new organic channel that it's training channel on the Mark.
Sitting in a pretty big in Asia, not not in the United States not in Europe , but pretty big Big in Asia that will also we announced that in the next day life shopping with a personal shopper. So concierge commerce. So we believe the missing link between online and offline also is the the sales team.
The team that are inside the stores and for that we launched the sale Zap. The in store solution of detects that allows the sales team to participate in the journey and now we believe with installed sales App plus coma suite, we fulfill the necessity of a unified commerce.
Enhancing our position as a number one solution off for unified Commerce bike Gardner. So let me know if I covered the two aspects of the question. Please.
Yes that was very clear thank you.
Our next question comes from Clark Jeffries from Piper Sandler. Please go ahead.
Hello. Thank you for taking the question Uhm first question is really around some of those north American merchant that you.
Indicated we're going through implementation of recent deals how should we size those merchants I mean, what what's the line of sight to being able to.
Claim $100 million plus GMB merchants in North America at this point and.
And then the second question is really around really run the another share repurchase authorization today.
Is this an opportunistic use of capital given the the sort of focus on leverage and the model right now or do you think even looking beyond this year buyback will continue to be attractive. Thank you.
So my dad here I'm Gonna answer about the cases that we announced an investor day. We are proud of the solid steps, we are making on our international expansion.
We are seen that hour positioning as a corner specialist.
With very technical approach and our position as a composable incomplete solution is helping our message to resonate more and more with potential customers in the west in Europe .
At our recent Investor date, we share those contracts with with renal brands like beauty counter casino in Hurst. These companies have chosen <unk> as their preferred used oklahoma's platform and will progressively go live in the forthcoming quarters.
We also have additional customers who have already signed contracts that are under implementation and look forward to announcing or once they are life.
We are having a good consistent pipeline in the U as in Europe . So we have a lot of work ahead of us and in the quarters to come as always we are announcing you're gonna see our clients alive being announced that as well.
It's also interesting to remark the surge of a beat to be opportunities that are emerging as I have mentioned in previous earnings skulls nearly half of the opportunities in the United States or B two b leads our.
Our value proposition is resonating with potential customers, we are consistently advancing to more mature stages on RFP processes and showing gazing the growing concentration of our composable incomplete platform Beach.
Let's go quickly on three cases like the beauty countered that you mentioned.
Will handle all online operations in transactions for the for for them there'll be resolved.
The beauty consultants given their MLM go to market strategy, we got a hold a digital direct to consumer channel and the physical stores also in the United States and these rollout will be also progressive and we will start to impact I'll operational matrix next year as well so even though you will run all.
Most the entire vol.
Volume of your account or just to align expectations, where we will not run their wholesale channel. So just to to make a disclaimer here on cause you know cause you know we will start to go lie phasing inviting friends and family to experience like the the the new web stole the these limited introduction will take place in the.
Single store with the next couple of months subsequently, we have a map it out our rollout strategy that we won't fold progressively we.
We expect for the second half of 2024 fully rolling out cause you know.
In France.
As you know achieving a seamless transition an optical optimal operation of volumes required like really.
Really discipline execution, we typically translate into a six to one year ramp up time after the go life. So.
On Horse Corporation. The U S announcement that we brought in the in the rest of the day. They are gearing up at more and adding more than 10 <unk> platform.
Each of the <unk>.
Each of these brands will work as separate marketplace, correct or is it by its own unique attributes and offerings why other brands will share a common pool of sellers in a unified catalog.
<unk> will be clear through the product descriptions and presentations.
To sum it up.
We see a significant opportunity for detecting the U as in Europe .
We are seeing them more interest in our offerings.
The analysts of Gardner IDC and forests are are increasing the levels of recognition of <unk> brand.
We are tangibly, reflecting into the customers that are pursuing organically via text. So we are conservatively and casualties optimistic for the for the future that will come from U S. In Europe .
Perfect Magenta and on the second question Hi, Clark. Thanks. Thanks for your question regarding the buyback is more optimistic opportunity here that we are seeing that we approach so approving a buyback program for another year.
Relax our confidence in the company's financial position and our commitment to delivering long term value Chihuahua shareholders.
And as a high growth company, we constantly look for opportunities to invest our resources to accelerate growth.
Considering our strong cash position and the clarity we have in terms of the next year's capital location we've.
We view these buyback program as an attractive captor location opportunity for the next one year.
Finally, it is important to note that the current buyback program that we are announcing use relatively aligned with the current dilution from our share based compensation that what you're saying so hopefully that answers the question.
Yes, thank you very much.
Our next question comes from the line as Luka Brendan from Bank of America. Please go ahead.
Hi, Thank you for taking my questions I have two here first if you could give us an outlook of how you're looking at the e-commerce market for the main regions you operate in it has there been any improvement in the second quarter, so far versus what we've seen in the first quarter or does it remain difficult.
And second of follow up in competition.
We have seen many of the players that are focused on smaller clients, saying that they are now focusing on.
Entering that market.
Bigger clients have you seen any impact on that <unk> from your side have you seen any of your Ah smaller clients maybe being targeted.
Those players.
There'll be any major impacts thank you.
Alright, Okay. You gather here are happy to take the first question on the market growth.
Comment a little bit on the overall e-commerce market growth and then we can talk about the the regions.
So while E. Commerce continues to grow single digit we continued to consistently outperformed the market and before on a GMB basis as strong as the top performers in the industry.
Our ability to adapt and stay resilient has been crucial.
Our dedication to customers and partners remain very strong and we are <unk> continuously refining our offerings you stay ahead of the game.
There are a few reasons that drove hour overperformance versus the marketing Youtube.
First and most relevant one as I mentioned to Marcellus questions was that we added new customers to detox, Eddie net new G. M. D to our platform. We believe we are being successfully attracting new customers, because we are helping them achieve profitability and sustainable growth by reducing the total cost of ownership and simplifying the.
Commerce architecture.
The second one is that our large enterprise existing customer base continue to show resilient Grove.
In the same store sales in the teens range and it's important information that our existing customers are performing the market by seamless integrating.
Physical stores each of the diesel shopping experience as we mentioned in the previous quarters and these integration of the physical store with additional shopping experience has led to an increase in conversion rates expanded inventories fury stock outs and faster deliveries among among many other benefits Oh.
One the geographical breakdown, we give these.
Disclosure on an annual basis, given the sales cycles that we have that are pretty long right. So.
Mmm, nothing too meaningful happens from quarter to quarter and if you remember did 2022 disclosure that we made.
Mhm 2022, we grew like mid twenties percentage.
Brazil was a line with that slightly below the average.
While the rest of the world. So U S and Europe grew in the 50% range of our social way.
Growing.
Overall company and these type of friends, we have <unk> for some time and as I said, there is no big variations quarter to quarter, given the long sales cycle and.
And we would expect something.
Like that to continue happy so again, we give the detail disclosure on a yearly basis. So I think this is what we can explain on the qualitative basis here on the quarter.
And for the second question about competition opposite over to Marianna.
So I'll I'll competition, we are not seeing a different landscape for competition and that should be more specific by region. We are not seen any new names in Europe and U S. Latin in Brazil. There are there are.
All the same.
We as we are increasing our penetration in B two b, yes, we are seeing Oh names of B two b at that now for for US is a new <unk> in the B two b space, mainly in the United States in the United States, but no the market stays with the same names at the only major.
Kind of a public notice was a oracle kind of moving out of the coldness environment, but no further kind of a new competitor in the in the market.
Okay very clear thank you for your answers.
And our next question comes from the line of <unk> from Keybanc. Please go ahead.
Hey, guys and thanks for taking my question.
I'm happy to hear that sales cycle.
Come back to normalize levels, just wondering if your guidance assumes this recovered level and your sales cycles and then my second question is wondering if you guys to get some color.
Ramp speed of your new car lights, and wondering if that symptom recovery too or if we're still seeing merchants kind of pull back on.
Sales and marketing spend thanks.
Hi, <unk>. Thanks. Thanks for your question so owned the sales cycle, we men we nation.
Bolton Darren he's been using the prepared remarks that we have seen and encourage <unk> off the same cycle.
We have not gone back to normal to historical levels. They always do slightly above but we are seeing you and encourage trend with <unk> right. So so that's that's what we are seeing now that they go lives in ramp ups is it's.
We are including that in the overall cycle as we Mason right. So we are seeing a similar trend there as well. So this is encourage.
To to see so on the on what's building should the guidance right Bolf Q3, and 20 twenty-three guidance assume the same store see ya from existing customers in line.
Current levels as well as continue <unk> off the C O cycle from new customers.
Not yet going back to normal, but continuous application and if you look back at previous quarters, you will notice that our queue three FX neutral guidance was the same as <unk>.
<unk>, while we have increased the 2023 effects neutral guidance from 15% to 19% to 60% to 19% last quarter and now to 18% to 20%.
Have you said that you know market conditions remain uncertain for instance, given the holiday shopping events ask you for is hard to predict the promotional behavior and therefore, the G. M D from our customers under the current retail market setup.
And finally, I would say that we are confident that we are well positioned to capture digital market opportunity. Although we have seen some volatility same store sales are existing customer base has continued to outperform the market and we are seeing good new customer sales momentum that should continue.
Supporting our growth going forward.
Great. Thanks for card I appreciate it.
Thank you and with no further questions I'd like to turn the floor back over to our presenters for closing remarks.
<unk> authenticated too loyal customers and partners health profile goes into new hiking commerce transformation, our customers pay has consistently shown to multiple visitors.
So everything is a testament to the strength and reliability of the textbook.
Vehicle system low annual revenue sure we have experience.
The <unk> trust, our customer placing us this.
Mmk has enable us to foster a robust and sustainable business model.
<unk> S for continued growth.
The macro economic.
Silent poses a huge challenge for enterprise Davis to meet the operation and financial targets. This represents an opportunity for the checks.
Legacy players dominating at best <unk> data profile <unk>.
Prices and Gray Davis activity.
<unk> right away.
On the other hand emerging hadleigh spraying.
The best option.
S even though.
Great customization it comes with complexity in high operating costs.
We stand out by offering a composable incomplete plugged the phone that combines the best of both worlds, which with an offer that so just about what enterprise and retailers are looking for.
Together was shaping remarkable customer experiences and certify opposition at least in the pharmacy industry.
Thank you everyone for joining us today.
Look forward to keep your workday.
Or at least call have a wonderful.
Thank you and once again, ladies and gentlemen that does conclude today's call. Thank you all for joining you may now disconnect.
Mmm.
[music].
Mmm.
[music].
Mmm.
Mmm.
Mmm.
Mmm.
[music].